FSA review confirms NO RESTRICTIONS on Loan To Value/Income...

Dan:_4

brit1234 wrote: »

My prediction record has been pretty good so far with pointing out the comming credit crunch, the housing crash. What took me by suprise was the drastic cutting of interest rates and quantative easing(money printing) which is delaying this downturn.

I remember you stating around last December/Jan that even with interest rates at 0.5% and BoE QE could not prevent huge property falls during 2009.

50% by xmas 2009.

Top prediction Brit. Facts in your signature are incorrect. You have been discredited.

julieq

We wouldn't be able to back our currency with gold even if we had all of it. Gold is an emotive asset class because it's tangible and covetable, that's the long and the short of it. It's a judgement call whether it's more useful at any particular time than holding dollars.

I have to say there's a persuasive argument for the linkage between pensions raiding and people looking elsewhere, but on the other side of that it really wasn't a causal factor in the current crisis. In fact what REALLY clobbered pensions wasn't Brown's raid but the "new paradigm" share price bubble up to 2000 on which Brown's decision was predicated. That allowed companies with FS schemes to basically pull money from them, the capital growth being enough to more than cover liablities, then when the tide came out they were facing massive liabilities. That's still unwinding now, it's far more of a factor than a dividend tax raid.

You can't get away from the fact that bubbles are basically bad, it's like stop go driving on the motorway. Yes we had a housing bubble here, and that was bad, it creates inevitable downstream trouble. Had we not had the US subprime problem, we would have had some sort of correction. But things in the event have unwound differently. If you work on the basis that the current crisis is all about the UK housing market, then you'll draw wrong conclusions. In fact I suspect the UK is getting back to a point from which the UK specific situation will start to unwind, but you're right in saying that the consequences of the world recession have changed the backdrop. So your predictions also need to change.

There are incidentally big scary bubbles developing elsewhere. Look at places like Malaysia where off plan buying into large condos is becoming the fashionable investment choice, despite very large areas of available land and basically low wages. Our bubble looks very respectable against that.

brit1234

Dan: wrote: »

I remember you stating around last December/Jan that even with interest rates at 0.5% and BoE QE could not prevent huge property falls during 2009.

50% by xmas 2009.

Top prediction Brit. Facts in your signature are incorrect. You have been discredited.

I think you got that wrong.:rotfl:

I would of said there are going to be large falls in house prices back to normal levels rather than the inflatted ones. Now thats about 50% back to 3 times lending possibly morewith an over correction.

At no point did I say despite low interest rates and QE. Go find that post, you won't find it.

As for the 50% for 2009 we were well on track to that with the numbers of properties increasing rapidly at 50% falls. Had it not been for the interest rate cuts and QE that would of been the case, its simply delayed the falls till rates are forced up due to inflation.

Is anyone here then saying its over? Be brave and we will mark your comments for the future. I predict we have a lot more bad news stored up in the next couple years with the resumption of the crash.

Graham_Devon

Oh my GOD!!!!

Nurse.... nurse.....NURSE!!!

Someone got a prediciton on the internet wrong as they couldn't possibly predict the levels the government have gone to to keep the party going!!!

Bloody criminal that.....so criminal, some are whacking off to it at every given chance. :rolleyes:

Mistymaid

It's quite funny this recent statement by Mr Brown, because I remember very, very, clearly back in late 2004 there was a party political broadcast and Mr Brown was staring out at me with his limpid smile telling me how, 'You are all better off now your houses are worth so much more."
At this point I actually looked behind me to see who he was talking to because if he thought I thought I was 'better off,' then he don't know me too well.

Brown, like most other global politicians kept this fiasco going. If he'd raised interest rates in 2002, or let the BoE calculate mortgages into bank rates, or stopped the banks lending at 100%, 125%, cut back on interest free, stopped self certification mortgages or not lifted the regulations the FSA had over the banks ... the impact on this country would have been negligable compared to what it is now.

Brown has been an economic liability from the start, and let's not mince words, most of the UK public were having a great time in the first 5 years of the new century. He knew this, he knew people were enjoying 'feeling wealthy,' and that's why he could stare out of my TV screen with a straight face and explain how much better off I was.
He would keep it going as long as he had to ... and then he finally got 'the' job.

Cleaver

Graham_Devon wrote: »

Oh my GOD!!!!

Nurse.... nurse.....NURSE!!!

Someone got a prediciton on the internet wrong as they couldn't possibly predict the levels the government have gone to to keep the party going!!!

Ignoring the various childish insults on both sides for just a minute, it was always fairly obvious that any government would introduce pretty strong measures to prop up any housing market. It was also fairly obvious to anyone with a brain that there was going to be a correction of some type at some point after 2004, because prices can't simply go up that long for ever. I thought they might stagnate for a few years with maybe some small dips, but then I didn't really see the apocalyptic banking stuff we've had over the past few years. My bad.

Brit regulary used to come on here and predict, often without any seeming doubt or slight questioning of his own judgement, that property would see average price drops of 50% by Christmas 2009. He was even confident enough to make this his long-term signature so that the statement effectively defined all of his posts. And fair enough, at least he made a prediction, I wouldn't profess to even having the first clue about which way property prices would go and still don't really. However, if I had been that confident and then got it wrong by around 4 or 5 times magnitude, I would probably expect to be mocked by certain quarters.

I guess the interestering thing with some of the more uber-pessimistic types is that they are still on the same course, their opinions seemingly completely unshakable (and the same with the completely optimistic people too I guess). The facts are that we seem to be coming out of recession and, whilst we can debate whether it's been done 'properly', or with or without 'economic fundementals', we are seeing a lot of growth. We've seen the global banking system almost collapse, credit for mortgages squeezed to within an inch of it's life, 40% or 50% of values wiped off some markets and what has happed to our house prices? A 12% drop. Which is mental really, considering. And it has only dropped this much because we have a society that likes high prices and seemingly wants things to stay that way, institutions that like lending for people to keep up these high prices and a government that's happy as larry to keep this status quo in order.

I think Feb 2009 was the bottom too, and although I don't think we'll see much in terms of rises over the next couple of years, I just can't see any reason why prices would fall any further. I know, I know, 'economic fundementals', "where's the money coming from?" etc. etc. We're in the process of looking around us and houses everywhere are selling, many at 2007 levels. It just shows no sign of stopping. I wouldn't profess to having a clue about how, or why, but they are.

So after this very waffley post from a clueless person my main point is: isn't it weird how some people never seem to change their tune or opinions, despite a very rapidly changing world out there?

Mistymaid

I don't believe this is either the economic or housing market bottom.

Reasons being. We may be cutting back and trying to pay off our debts but we aren't economically productive, not least ways wholesale.
The housing market only needs to see a slight rise in interest rates and the whole thing will come crashing down. It's low interest rates that are keeping it afloat - if they went up to say 4%, which is historically lower than average, how many people would it take out?

Oh, and loads and loads more. But I'm tired ...

Cleaver

Mistymaid wrote: »

It's low interest rates that are keeping it afloat - if they went up to say 4%, which is historically lower than average, how many people would it take out?

Just to ask a quick, thick question.

Around two years ago when the base rate was around 4% or 5% most people were happy paying off their mortgage and reposession levels were low. We haven't had drastic increases in unemployment since then, so if the base rate went back to 4% or 5% tomorrow, I presume it wouldn't take out many people? Or have I got this wrong?

Our mortgage rate has remained fairly steady for the past 5 or 6 years. We had a fixed mortgage from 2003 to 2008 on 4.7%. It's now around 3.8% I think on the SVR. Not really a lot of difference?

Mistymaid

It was starting to take them out, remember the TV programmes, Tonight, was one I think where they were showing how people were losing their homes, singles at the bottom end seeming to be quite vulnerable.

And you also have to remember that at the time people were on mortgages that had been fixed or whatever for several years, those were starting to come to an end and as soon as they did and mortgages started jumping they were going down.

Personally I saw people come so close to losing their homes, one in particular who had self certed for one he couldn't possibly afford, nearly ended up committing you know what.

Cleaver

Mistymaid wrote: »

It was starting to take them out, remember the TV programmes, Tonight, was one I think where they were showing how people were losing their homes, singles at the bottom end seeming to be quite vulnerable.

I'm not trying to insult you in any way shape or form, but I can't debate anything based around the tabloid news-felch that is 'Tonight'.

Mistymaid wrote: »

And you also have to remember that at the time people were on mortgages that had been fixed or whatever for several years, those were starting to come to an end and as soon as they did and mortgages started jumping they were going down.

Personally I saw people come so close to losing their homes, one in particular who had self certed for one he couldn't possibly afford, nearly ended up committing you know what.

Of course, when rates go up people will lose their homes. Obviously this would happen under any circumstances. People who fixed at a very low rate but didn't have the forethought to see if they could afford the mortgage at higher rates, people who self-certed, people who have lost their jobs etc.

But this will only be a minority. Let's say you're a nice FTBer couple with a joint monthly income of £3,000 and you bought a house over the past couple of years with a £130,000 mortgage on a lovely fixed rate of 3%. You'd be paying back around £650 a month, or something around that. Let's say they come off the fixed and their rate more than doubles, to 7% in 2012, or something along those lines. Their monthly payment goes up to £900. Sure, that's a kick in the teeth. But they'd cope. You'd also presume that maybe one, or both, were earning more in 2012. Or that they had been sensible enough to save some money to pay off the mortgage.

I dunno, maybe I see things through rose tinted glasses, and I'm sure someone will be along in a minute to tell me the above scenario is stupid and that that couple would have a £2000 mortgage and will have been spending all their income on speedboats and 4x4s because they are debt monkeys.